Bill Bonner

The latest from the G20 meeting in Toronto. As you recall, the meeting was billed as a showdown between the Germans and the Americans…that is, between the deficit cutters and the big spenders…

That is, between the people without a hope and the people without a clue.

TORONTO (AP) – World leaders must work together to make sure the global recovery stays on track, Treasury Secretary Timothy Geithner said Saturday.

Geithner made his remarks as President Barack Obama has warned his counterparts from the Group of 20 nations to not reel in measures to stimulate their economies too quickly. The United States fears doing so could endanger the global recovery.

Asked if the global economy could slip back into another “double dip” recession, Geithner said the answer to that question hinges on decisions made by world leaders. “It is within the capacity of the people who are going to be in those rooms together in the next few days to avoid that outcome,” he said.

“If the world economy is to expand at its potential, if growth is going to be sustainable in the future, then we need to act together to strengthen the recovery and finish the job of repairing the damage of the crisis.”

As near as we can tell, the recovery has been on the wrong road since it started its motor. And the folks in Toronto couldn’t put it “back on track,” even if they knew what they were doing. All they can do is get out of the way.

The system has too much debt. It needs to get rid of some of that debt – by write offs, defaults, and pay downs. Things that must happen, must happen sooner or later. Better sooner than later.

But what IS happening now?

World trade is breaking down – the Baltic Dry index, a measure of world trade, recently fell 17 days in a row.

Consumer spending is breaking down – the “consumer discretionary” sector has turned ominously negative.

Stocks are breaking down – the Dow fell 9 points on Friday…145 points the day before….

Employment is breaking down – you know the story.

Housing is breaking down – not since 1963 have people bought so few new houses.

Does this sound like a recovery? Of course not.

What it sounds like is a defeat. A failure for the recovery team.

But don’t worry, boys, sometimes failure is the best you can hope for. And come to think of it…defeat is not so bad. Think how much better off the Chinese would have been if Mao’s long march had ended in the total collapse of his army. And suppose George W. Bush hadn’t been such a total failure? People might not have elected Barack Obama. And what if the invention of the television had never caught on? Americans might still have some dignity and brains….

Not only do collapse and failure help prevent bigger mistakes, they also correct mistakes after you’ve made them. Running up debt equal to 362% of global GDP was probably not the smartest thing the human race ever did. Trying to ‘recover’ the economy and reproduce the system that produced those debts is even dumber.

Instead, let’s have a good old fashioned correction…a collapse…a failure of the Geithner, Bernanke, Obama team. We’re going to have it anyways. Bring it on. Get it over with!

Bill Bonner
for The Daily Reckoning

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success in numerous industries. His unique writing style, philanthropic undertakings and preservationist activities have been recognized by some of America's most respected authorities. With his friend and colleague Addison Wiggin, he co-founded The Daily Reckoning in 1999, and together they co-wrote the New York Times best-selling books Financial Reckoning Day and Empire of Debt. His other works include Mobs, Messiahs and Markets (with Lila Rajiva), Dice Have No Memory, and most recently, Hormegeddon: How Too Much of a Good Thing Leads to Disaster. His most recent project is The Bill Bonner Letter.

  • jason

    The silly newspaper today reported that “stocks were rising because consumer confidence was up” but by closing bell the Dow was down 5 points. The story is now “Stocks slip when consumer saving outpaces consumer spending.” How could this have had more weight than the increase in confidence?

  • http://www.tentonbooks.com Geoff

    “Running up debt equal to 362% of global GDP was probably not the smartest thing the human race ever did. Trying to ‘recover’ the economy and reproduce the system that produced those debts is even dumber.”

    That’s the quote of the day! You rule, Bill.

  • Fred

    Now see what a good job you can do when you stop bellyaching about leeches, zombies, etc. That silly stuff doesn’t help anybody, but I can use quotes like you gave us today.

  • Melvin Woody

    Why are you sending me all of these blogs? I didn’t ask for any. When the Monitor stopped publishing daily, I signed up for on-line news delivery, not for all this uninvited opinion. Is there some way to put a stop to it all. I signed up for news. You now send me daily emails about topics of interest – but the headlines and little squibs don’t distinguish between real news and this sort of empty opinion. I would welcome the sort of staff written editorial content that used to appear in the daily Monitor, but not this sort of hot air. Can’t I subscribe to news along. Or, at the very least, can’t you indicate which items are news and which are just blogs? Or is this even the proper spot to complain? I seem to have been disconnected from the Monitor somehow, whereas I want them to take corrective action.

Recent Articles

Extra!
How YOU Can Help Pass the Swiss Gold Referendum

Grant Williams

For those who doubt the effectiveness of the Swiss Gold Initiative, Grant Williams has a few startling charts to show you. Today, he relays just how popular this movement is, and how you can actually weigh-in on the subject... no matter where in the world you call home. Read on...


How Small Cap Stocks Saved the Market

Greg Guenthner

For most of the year, no one wanted small cap stocks in their portfolios. But over the last three weeks, few sectors of the market have performed better than small caps. Greg Guenthner explains how to use this to your advantage... and what to expect for the rest of 2014. Read on...


Why a Strong Dollar is the Mortal Enemy of Gold and Oil

Frank Holmes

Gold and oil are down because the US dollar is up, despite all the inflationary pressures the Fed has put on it. What's going on? Today, Frank Holmes, breaks down the U.S. economy’s current direction with several important charts. Plus, he's got a mining play for you that's prospering despite the current sentiment...


Bill Bonner
Confessions of a Newsletter Man

Bill Bonner

Being a financial newsletter writer certainly has a few advantages. Namely, it affords one the opportunity to comment on the financial markets without having to take them seriously. Today, Bill Bonner looks back on what drew him to this business, and the unique and entertaining cast of characters he's met along the way. Read on...


R.I.P. Tapir (5/22/13 – 10/29/14)

Greg Kadajski

The Tapir, beloved pig-like mammal and financial machination, quietly passed away at 2:00 p.m. EST on October 29, 2014. He lived a misunderstood life and was held responsible for many things entirely out of his control. Nevertheless, he will be missed by all who thought they knew him...


Extra!
The Most Important Factor of the Swiss Gold Initiative

Grant Williams

The Swiss Gold Initiative has the the Swiss National Bank in a panic. Should the referendum pass, the SNB will be responsible for ensuring that 20% of its total assets are held in gold. That's an awful lot of yellow metal. Today, Grant Williams puts that number into perspective and explains how it could affect the gold market...